FDATA North America

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Video Member Spotlight: Method Financial

This month’s member spotlight features Mit Shah, COO and Co-Founder of Method Financial, who explains how Method’s technology allows customers to securely permission their financial data to third-party providers of their choosing without having to use traditional credential-based methods:

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FDATA North America Submits Comment Letter in Response to CFPB Section 1033 SBREFA Outline of Proposals for Consideration

FDATA North America Submits Comment Letter in Response to CFPB Section 1033 SBREFA Outline of Proposals for Consideration

Contact: Justin Santopietro; [email protected]

January 25, 2023, Washington, DC – The Financial Data and Technology Association (FDATA) of North America submitted a comment letter to the Consumer Financial Protection Bureau (CFPB) in response to its Outline of Proposals for Consideration for the Small Business Regulatory Enforcement Fairness Act (SBREFA) implementing Section 1033 of the Dodd-Frank Act. Upon filing the comment letter, Executive Director Steve Boms said:

As an organization representing more than 30 financial technology and data aggregation companies, FDATA North America has long advocated for the CFPB to issue a rule implementing Section 1033 of the Dodd-Frank Act using the best information available from the broadest number of market stakeholders possible. We commend the CFPB for outlining a strong series of proposals that, when implemented, will create a more competitive, more accessible, and more inclusive financial services marketplace. As it prepares to issue a proposed rule implementing Section 1033, we encourage the CFPB to broaden the scope of covered accounts and covered recipients under the rule to maximize its impact, among other important improvements we suggest the Bureau to consider. We look forward to continuing our positive engagement with the CFPB as this rulemaking process continues.”

While FDATA’s comment letter expressed support for all the proposals in the SBREFA outline, it also urged the CFPB to expand the scope of this rulemaking by:

  • Covering a broader swath of both covered parties, including small businesses and investors, and account types, including providers of government benefit accounts used to distribute needs-based benefits programs, utility, nonfinancial, and payroll accounts, and accounts held by financial institutions not covered by Regulation E or Regulation Z;
  • Guarding against potential commercial incentives by data providers to restrict data access for particular use cases by ensuring that customer authorization may not be overridden except in very limited circumstances;
  • Requiring as many financial institutions as practicable to build and implement credential-less data access methods, while allowing sufficient time for smaller financial institutions to do so;
  • Permitting credential-based or PII and account number-enabled data access to persist as fallback options in instances in which data is not accessible through other means;
  • Clearly distinguishing between customer data and de-identified data with regard to secondary use cases;
  • Calibrating the timeline for implementation for credential-less data access based on financial institution size, and
  • Establishing a new regime for direct CFPB supervision of data aggregation platforms.

Over the past several years, FDATA has repeatedly urged the CFPB to advance a Section 1033 rulemaking, including in its response to the CFPB’s October 2020 Section 1033 Advanced Notice of Proposed Rulemaking (ANPR) and last years’ CFPB Request for Information (RFI) on so-called “Junk Fees.” FDATA North America has also advocated for a Section 1033 rulemaking through comment letters to other federal agencies, including its response to the Office of the Comptroller of the Currency’s, Federal Deposit Insurance Corporation’s and Federal Reserve’s Proposed Interagency Guidance on Third-Party Risk Management, and to the National Institute of Standards and Technology in response to its draft report on Cybersecurity Considerations for Open banking Technology and Emerging Standards.

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Video Member Spotlight: Questrade

This Member Spotlight features Christine Day, Chief Information Officer at Questrade, who explains the myriad ways that consumer-permissioned data sharing can add value, lower costs, increase competition, and increase personalization of a wide variety of financial products and services:

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Video Member Spotlight: EQ Bank

This month’s Member Spotlight features Cathy Ly, Vice President of Customer Experience and Operations, who tells us how challenger banks like EQ rely on customer-permissioned data access to offer custom and competitive financial services to a wide array of Canadians:

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FDATA North America Applauds CFPB’s Release of Small Business Panel Proposals for Section 1033 Rulemaking

October 27, 2022 Washington, DC- Following today’s Consumer Financial Protection Bureau publication of proposals for the upcoming Small Business Regulatory Enforcement Fairness Act (SBREFA) panel for the Dodd-Frank Section 1033 rulemaking, FDATA North America Executive Director Steve Boms released the following statement:

“FDATA applauds the CFPB for this timely release of its SBREFA outline. This outline marks the first concrete step towards the implementation of an open finance system in the United States and affirms that consumers should have complete control over their financial data. If implemented, the framework envisioned within the outline will strongly align with the goals that FDATA North America has long supported: a national, technology-neutral financial data portability standard that will allow consumers to select in a more competitive ecosystem from the financial services providers that can best improve their financial wellbeing. We applaud the CFPB staff and Director Chopra for their diligent work and look forward to working with the CFPB to promote an expansive, customer-centric proposed rule to implement Section 1033 of the Dodd-Frank Act.”

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Video Member Spotlight: Flinks

 
This month’s FDATA Member Spotlight features Dominique Samson, VP of Corporate Affairs at Flinks, who explains how improved data connectivity can reduce friction in the financial services ecosystem and benefit consumers with limited credit history:

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FDATA North America Highlights Importance of API Standards and Monitoring

September 29, 2022, Washington, DC -As both Canada and the United States continue to move towards open banking via APIs, it is essential that minimum API standards be set to ensure that consumers and SMEs have uninterrupted access to their financial data.

To this end, FDATA has developed four principles that will be critical to the design of a well-implemented API environment in North America. These principles cover data scope, reliability standards, fallback options, and the necessity of establishing a neutral monitoring agency. These principles can be found here, and below:

  • Any non-proprietary data available to an end user through a data provider’s online customer portal or paper statement must also be required to be made available in any API a data provider implements in an open banking environment. At present, data providers unilaterally determine which data elements their customers can and cannot share with third parties. In a true open banking environment, the customer – not their financial services provider – is empowered to make this decision. Within the PSD2 framework in Europe, this has led to services being withdrawn as API functionality did not keep pace with pre-existing technologies.
  • Any APIs built by data providers to facilitate data sharing in an open banking environment must, at a minimum, be as reliable as that data provider’s customer-facing online portal. Regulatory agencies in both Canada and the United States have understandably set prescriptive requirements regarding the uptime of online customer-facing portals at financial institutions to ensure that consumers and SMEs have continual access to their data. This same standard must apply in any open banking environment.
  • To the extent data requested by a customer is not available through an API connection, a fallback option must be permitted to be used to access the requested data. The legal customer data right upon which an open banking environment is built cannot be ignored if a data element requested by a customer is not available through a data provider’s API or if that API is down or unresponsive. Screen scraping must be maintained as a fallback option that may be used to access any data not included in or available from a data provider’s API.
  • A neutral entity must be responsible for regularly monitoring the robustness, reliability, and usability of data providers’ APIs in an open banking environment. A neutral entity should be tasked with the responsibility for regularly measuring and reporting, among other metrics: the uptime of all open banking providers’ APIs; whether all of the data available to the end user on the data provider’s online customer portal and/or paper statement is available through the API; the responsiveness of the API; whether the API is constructed in such a manner that it introduces unnecessary friction in the customer’s data connectivity journey. These measurements should be the basis upon which a fallback option is permitted. Ideally, these metrics would be made publicly available to facilitate the ability of end users to identify the effectiveness of their financial provider’s data sharing capabilities. Such an entity should come from outside of the sector itself in order to not be perceived as having their own fiduciary interest in the metrics delivered.

Issues related to API robustness, reliability, and user experience have stunted the growth of open banking use cases in multiple markets across the globe that have moved more quickly than North America toward implementing legally binding customer financial data rights. It has been evident from experiences in Europe, the United Kingdom and Australia that well-defined standards without equally well-defined systems to measure them in a way that all parties can agree to leads to increased friction and a technical overhead placed on the regulator which they may not be well-positioned to adjudicate. Ensuring at the outset minimum API requirements for any open banking data providers, as well as a neutral monitoring entity to measure the quality and reliability of those APIs, will prevent Canada and the United States from experiencing similar issues as we begin our own North American open banking journey.


 

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FDATA North America Submits Comments to Canada’s Standing Committee on Finance Pre-2023 Budget Consultations

September 26, 2022, Washington, DC – Today, the Financial Data and Technology Association (FDATA) of North America submitted comments to Canada’s Standing Committee on Finance (FINA) as part of its pre-budget consultations in advance of the 2023 budget.

In its comments, FDATA North America called on the government to:

  • Include language in Budget 2023 asserting the importance of governance in an open banking framework, and that any open banking governance entity must be neutral, transparent, and nimble;
  • Allocate sufficient and sustained funding in Budget 2023 towards the implementation of an open banking framework and governance entity; and
  • Include language in Budget 2023 outlining its approach to Open Finance, the next logical step after Open Banking, and the framework needed to truly unlock market innovation and competition to benefit Canadian consumers and businesses. This includes an amendment to the Canadian Payments Act to grant federally regulated payment service providers access to Payment Canada’s forthcoming real-time retail payment system and make them eligible for membership in Payments Canada.

In the submission, FDATA NA also asserted that any open banking governance entity in Canada must be neutral (i.e. not controlled by any particular stakeholder(s) with commercial interests in the ecosystem), transparent (i.e. it invites and considers stakeholder input and subjects its decisions to an open, publicly visible process), and nimble (i.e. capable of making binding decisions relatively quickly and without undue bureaucracy), with all stakeholders in the open banking system agreeing to comply with the decisions and determinations made by the open banking governance entity as a condition of being active in the market.

A full copy of the submission is available below:

Image result for paperclip iconFDATA North America 2023 Pre-Budget Consultations


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Video Member Spotlight: Betterment


In this Member Spotlight, Betterment’s Associate General Counsel Josh Rubin explains how access to consumer-permissioned financial data is critical to Betterment’s ability to offer high quality, low-cost advice to everyday investors:

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Video Member Spotlight: Trustly


In this interview, Trustly Americas President Pete Ohser explains how consumer-permissioned data access greatly expands options, lowers costs, and removes barriers to financial services, as well as detailing how Trustly has been working with the policymaking and banking communities to make open banking a reality:

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